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Texas Property Tax Overview

I’m often asked why property taxes in Texas are as high as they are. It’s simple – Texas doesn’t have a state income tax, so the burden for taxes to pay for schools, roads, infrastructure, and social services falls upon the property owner – both commercial and residential. As high as they may seem, our overall tax burden in Texas is much lower than the national average, particularly when compared to the 41 states which levy an income tax. According to tax-burden figures provided by the Tax Foundation and the U.S. Commerce Department’s Bureau of Economic Analysis, Texas ranks 44th in overall tax burden (property, sales, and income taxes) as a percentage of income. You can learn more about this at the following web site: Retirement Living Information.

The ‘typical’ residential property owner in the greater Houston area is subject to a property-tax assessment (a.k.a. ad-valorem tax) from some or all of several entities – school district, City of Houston or Harris County (or both, depending on where you live), Harris County Hospital District, Harris County Department of Education, Harris County Flood Control District, one or two Emergency Services Districts (for fire and ambulance services), a junior-college district, the Port of Houston Authority, and a Municipal Utility District (MUD). MUDs are political entities which provide water and sewer services to the majority of residential and commercial property owners who don’t receive those services from the City of Houston.

That’s quite a list! The good news is – most of those entities have assessment rates ranging from $0.05 to $0.12 (five cents to twelve cents) per $100 of assessed value. The ones that take the biggest bite are school districts, Harris County (or City of Houston if you live inside Houston’s city limits), Harris County Hospital District, and (for most property owners outside Houston’s city limits) your local MUD. When you add them all up, property-tax burdens generally range from around $2.25 per $100 assessed value to as high as $3.50 per $100, with $2.75 being a rough average. So – for a home with an assessed value of $100,000, you can expect a property-tax burden (before Homestead, Disability, Over-65, or other exemption) ranging from $2,200 to $3,500 per year.

On average, school and MUD taxes combined represent anywhere from 50% to more than 80% of the total property-tax burden. School taxes (there are 22 independent school districts in Harris County!) generally range from $1.25 to $1.75 per $100 assessed value. MUD taxes generally range anywhere from $0.20 to as high as $1.50 per $100. By the way, assessed values are determined by one entity – your county Central Appraisal District. That way everyone uses the same assessment number for tax purposes. (Visit www.hcad.org for more details.)

If you’re new to Texas and/or the Harris County/Houston area, I hope this gives you a little better understanding of what to expect with regard to property taxes. Naturally, there are a lot of details about property taxes that can’t be fully explained in this limited space, so please don’t hesitate to contact me if you have any questions!